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Timothy Geithner

Asked this morning about his knowledge of the LIBOR scandal as early as 2008, Treasury Secretary Timothy Geithner defended his actions and promised a thorough reform effort. “We acted very early in response to concerns that the processes to set this rate were impaired and flawed and vulnerable to misrepresentation,” said Geithner, speaking at the CNBC Institutional Investor Delivering Alpha Conference in New York City for the second consecutive year. He acknowledged that the process has taken some time, but maintained that he followed the appropriate steps to bring the LIBOR issues to light.

Geithner’s actions notably included sending a 6-point memo to Mervyn King, Governor of the Bank of England, outlining a set of recommendations to “enhance the credibility” of the LIBOR rate-setting. The memo, which was published by the New York Times, recommends strengthening governance, specifying transaction size for rate quotes and eliminating the incentive to misreport.

Geithner also briefed U.S. regulators in 2008, setting in motion what he called a “very powerful enforcement response.” Promising more to come, Geithner noted, “We’re going to make sure there’s a strong, credible reform effort. We need to demonstrate to the world that we’re going to have the best enforcement response.”

In his discussion with Larry Kudlow, Geithner touched on the big risks facing the U.S. – the crisis in Europe and a deep sense of domestic political dysfunction – as well as some of the necessary steps to solidify the economy. In particular, he stressed a “well-designed program of support for economic growth,” including stronger infrastructure investment, improvements in education, targeted support for scientific research and support for private investment.

“Congress should extend the tax cuts that currently exist for 98% of Americans. Take the debt limit default risk off the table indefinitely. Pass the proposal to make mortgage refinancing more widely available. Give businesses an incentive to improve hiring, increase payroll. Give states the ability to get teachers and first responders back to work,” said Geithner.

Europe poses more risk to the U.S., maintained Geithner, mainly because it is outside of our control. The U.S. fiscal challenges, on the other hand, are within our power to diffuse.

“This is not a complicated challenge for the United States,” said Geithner. “This is within our capacity to deal with.”